End Poverty One Man Makes a
Huge Difference
In Ending Poverty For Millions

"Poverty can be solved, declares Muhammad Yunus. Charity
is not the way to help people in need; it is not a healthy basis for a relationship
between people. If you want to solve poverty, you have to put people in a
position to build their own life."
-- Ode Magazine interview with Muhammad Yunus, Issue 25, July 2005

Dear friends,

We can end poverty. In 1976, Muhammad Yunus founded the Grameen Bank to make small loans of about $100 to poor people with a business plan in his home country of Bangladesh. Since then the Grameen Bank has issued more than US$ 5 billion to help literally millions of poor around the globe to pull out of poverty. To ensure repayment, the bank uses a system of "solidarity groups." These small informal groups apply together for loans and its members act as co-guarantors of repayment and support one another's efforts at economic self-advancement. The system has been tremendously successful. I have little doubt that once enough people see the incredible value of this system, we can and eventually will end poverty in this world.

Below is an engaging interview with Mr. Yunus in my very favorite magazine—Ode. For those who don't know about the microlending movement started by Yunus, a microloan of $100 can very often pull an entire family in the developing world out of poverty in as little as one year. As this is by far the most powerful way of investing money for a better world I've found, I have invested all of my retirement money in microlending. To learn how you can pull several families out of poverty every year with only a $1,000 investment and still make a return on your investment, see http://www.weboflove.org/051023microcredit. By each of us choosing to use our money to better the world, we can powerfully build a brighter future for us all.

Poverty can be solved, declares Muhammad Yunus. But as long as politicians
and starry-eyed idealists are blinded by good intentions, poor people will
remain poor. Yunus, founder of the Grameen Bank, which pioneered the idea
of microcredit, knows how poverty can be effectively tackled. Marco Visscher
looked him up in Bangladesh and they sat down for a long talk.

This spring, poverty was suddenly way up on the political agenda again. European
leaders were elbowing each other aside to present their plans to combat poverty.
France's Jacques Chirac called for cancelling developing countries' debt.
Britain's Tony Blair set up the African Commission, which proposed eliminating
trade barriers and combating corruption. The United Nations presented a report,
written by American economist Jeffrey Sachs, which optimistically envisioned
that more development aid would create a world without poverty.

If there's one spot where this flow of news reports should be welcomed with
open arms, it's poverty-stricken Bangladesh. But the man in this country who
has done the most to liberate people from the grip of poverty, can only shake
his head. In his simple office—in the capital city of Dhaka on a busy street
where traffic inches along and rickshaw drivers stand along the side of the
street waiting for customers—Muhammad Yunus is not impressed. The intentions
are good, he believes, but out of touch with the reality of poor people's
everyday lives.

"It's the usual approach: charity," Yunus begins. "But charity
is not the way to help people in need; it is not a healthy basis for a relationship
between people. If you want to solve poverty, you have to put people in a
position to build their own life. Unfortunately, this is not how the aid industry
works. Western governments and development organizations think they need to
offer permanent charity. As a result, they keep entire economies in poverty
and families in an inhuman situation."

Well that's something! Over the past 30 plus years, Bangladesh has received
more than 23 billion euros ($30 billion U.S.) in aid and loans—and now an
ungrateful Bangladeshi banker is criticizing the West for its generosity?

But beware. It's unfair to judge Muhammad Yunus as a man spreading rebellious
ideas about development aid. Yunus is the undisputed leader of a radical new
counteroffensive in the battle against poverty. As founder of the Grameen
Bank, he is the creator of a concept that now represents an emerging force
in the financial world: microcredit, small loans for poor people.
Grameen has become a model for banks in nearly 100 countries, both in the
West and the developing world.

A former economics professor, who holds honorary doctorates from 22 universities
in 11 countries, Yunus has seen for himself what works and what doesn't work
in Bangladesh, just about the poorest country in the world. He has witnessed
how billions of dollars in foreign aid have created colossal projects (dams,
bridges, huge industrial plants) but not created a situation in which the
local population had to organize itself to solve its own problems. And that,
according to Yunus, holds the key to a world without poverty. He outlined
these ideas quite boldly and eloquently during our interview, quoted below:

"Poor people are not the authors of their poverty. Poverty is a creation
of a complex system of conceptions, rules and attitudes we have thought up
ourselves. Therefore, if you want to eradicate poverty you have to go back
to the drawing board, discover where we have planted the seeds of poverty
and make changes there."

"This is how I figured out that our financial institutions have incorporated
an enormously high threshold—collateral, which means that poor people, who
so desperately need credit to escape their poverty, never set foot in a bank.
They'd be laughed at. We believe that poor people will never repay their loans.
We consider it normal that banks—like other companies—must turn a profit and
that they exclude some 70, 80 percent of the world population. Those assumptions
are not up for discussion; this is simply the way it is. In reality, no one
has ever tested those ideas. After all, what bank lends money to poor people?"

"The approach to poverty is thwarted by our fixed convictions. Poor
people are helpless, unhealthy, illiterate and thus stupid, they have nothing,
they know nothing, we must take care of them, we must give them food... It is
completely wrong to think like this. I am convinced that poor people are just
as human as anyone else. They have just as much potential as anyone. They
are simply shoved into a box marked POOR! And it's written in giant letters
so that everyone simply treats them the way poor people are treated, because
we think this is the way we should treat them. This means it isn't easy to
get out of the box."

"This applies to individuals just as it does to countries. Governments
in developing countries receive money from wealthy governments that are kind
enough to contribute a portion of their national income to what is referred
to as "development aid." This required charity towards poorer countries
has become a credential that is not questioned nearly enough. Even our religions
tell us to give money and food to the poor; they don't say we should create
certain conditions and rights so the people can help themselves. But this
type of development aid is very damaging: the position of the government is
strengthened, the money doesn't get to the people who need it."

"I'm not just referring to poor countries. I'm also talking about the
wealthy, western countries where you have designed a great big box called
"social welfare." You say: oh, he is ill, he is handicapped, he
can't take care of himself, it is society's responsibility to keep him alive.
I think that's completely wrong. That way of thinking creates a divide between
those who work and can take care of themselves and those who cannot."

"And what happens? If you're one of the unlucky few, you'll get a benefit
payment every month. The message is clear: you can't do anything, the government
has to take care of you. So you become dependent. You get used to having society
give you money. You get it, you don't have to do anything for it, you don't
have to justify it. That is deadly to your initiative and you start waiting
for more aid. That's when they've broken your creativity. They've taken away
a fundamental human element."

"This social welfare system creates a human zoo. The animals in the
zoo are given their meals on time and a doctor comes by when they're sick,
but they are living in captivity. They still have a vague instinct that tells
them they should hunt, but they aren't challenged to go hungry for days on
end and hunt prey. The animals aren't as sharp and inventive as they would
be in nature. What about them is actually still animalistic? They have become
a poor imitation of themselves. By the same token, people who are swallowed
up in the western social welfare system are also no longer themselves. They
aren't stimulated to discover their possibilities, talents and creativity.
They are robbed of every challenge. They are curbed in their development."

"Poor people don't need to think of themselves as poor and sit and wait
for charity that won't ultimately save them. We can dispel poverty. And we
were making good progress. The United Nations had established the Millennium
Development Goals: poverty was to be cut in half by 2015 and completely eradicated
by 2050. Never before had mankind set such a courageous goal for itself. We
had a joint goal we were excited about, with which we ushered in a new millennium."

"And then came "9/11." That day plunged the entire world into
confusion. It gave the U.S. president an excuse to send the world in a different
direction, which created a global divide. Now everyone has become distrustful,
anyone could be a terrorist. It will take a long time to get the world back
on the track of optimism and on the track of a battle that I consider more
important than that of exacting democracy in all corners of the world: the
battle to grant very ordinary rights to people who are shut out and, as a
result, live in inhuman poverty."

"And yet I still think we can cut poverty in half within 10 years and
can eradicate it within a human lifetime. And I'm not just saying that because
it sounds positive. I really mean it. Every country, every city, every village
can halve the number of poor people. Come on, 10 years is a long time!"

"To solve the problem of poverty, you have to start thinking differently.
You have to treat poor people the way you want to be treated. You have to
offer them the same facilities you have access to. Indeed, like everyone else
they should be able to go to the bank for a loan because with a loan you can
create your own work, you can support yourself and generate income. Credit
is one of the barriers we must eliminate so that the poor can clamber out
of poverty. But it is not enough."

"For example, they must also have access to information technology because
knowledge is power—and they haven't had power. For centuries, the supply of
news has been dominated by journalists: an elite, in fact, that decided which
information was appropriate to pass on and which was not. You always had to
rely on journalists to find out what had happened in the country and the world.
But thanks to the internet, a whole range of news sources has emerged that
I can look to for information—from independent organizations to private weblogs
around the world. I can weigh opinions against one another, I can form my
own opinion based on various sources. That's a tremendous liberation because
it ultimately means you can't cheat poor people any longer... Or at least you
have to make more of an effort to cheat them."

"Thanks to the mobile telephone, farmers in Bangladesh can negotiate
directly with their customers about the price (see the story on GrameenPhone in Ode, April 2005, ed.). Via internet, farmers find out the actual market
value of their goods, enabling them to strengthen their negotiating position.
This means that poor farmers are no longer limited to the village economy.
They are no longer forced to rely on the clever middleman who kept the farmers
in ignorance and took off with their money. They are now plugged in to the
rest of the world."

"It is a good development that farmers are involved in the world economy,
but it is not a panacea. Our textbooks have greatly simplified the world economy:
it's an open market, it's a free world. But just try and launch a medicine
on the Japanese market; they'll tell you all about the rules. In the real
world, the market is only open to other parties insofar as it has been made
accessible by those who write the laws and the supervisory authorities."

"But take the corner grocer on your street where you've been shopping
for years. A big supermarket is being built nearby that is much cheaper and
offers freebies. Before you know it, you're standing in that supermarket with
your cart and that nice grocer has lost all his customers. Where are the regulations
protecting the grocer? Where are the regulations governing the supermarket?
Aha! So it's only a free market when you're big and have a lot of money."

"The economics textbooks are ripe for revision. Then we can also rectify
the misconception that a company is not always just a way to make money and
a businessperson is not always someone who wants to maximize profits. Companies
can also have another goal: to serve a societal purpose. The Grameen Bank
is one such example, there are more and we need many more. We need companies
whose first priority is striving towards a good aim. We need businesspeople
who are not driven by money but by their desire to contribute to society."

"They're out there you say? Of course, you mean those with a sense of
corporate social responsibility. But tell me, how can you focus on corporate
social responsibility if your primary aim is to turn a profit? The two don't
mix. I can understand that a businessperson would want to make a donation
to the tsunami victims. You give some money to a fund that helps sick children
and you hang nice, framed documents in your office so that everyone can see
the good things you do. But let me ask this question: why isn't your company
as a whole aimed at furthering a good cause?"

"Mind you, I'm not talking about charitable institutions, social or
non-governmental organisations—they cannot, for instance, go to the bank for
a loan and are dependent on subsidies and donations. I'm talking about a new
sector: companies that don't want to make a loss, so they can continue to
do business that contributes to the community as a whole. There aren't many
like that because the private sector has been wrongly labelled as a group
of merciless profit-makers."

"So if you wanted to do something good for the world, you didn't think
of starting a company; after all, you weren't interested in money. You signed
up to work at a social service institution or became a researcher so you could
develop medicines to cure people's ills—and which, by the way, would lavishly
line the pockets of others. But there is another, more challenging, way: via
the business community. Because I believe there is no better way to combine
your desire for a better world with effectiveness than through a company."

Effectiveness. That's the key word coming from Muhammad Yunus. Effectiveness
is an idea remarkably absent from many discussions about combating global
poverty. All too often, efforts to bring prosperity to developing countries
stall in good intentions, bureaucracy, pricey consultants and results that
make too little difference in the actual lives of poor people. Muhammad Yunus
refuses to accept this as the best we can do. Yunus has demonstrated that
combating poverty starts with action. And that these actions can sometimes
even make a profit.

"Sometimes I dream of an international stock exchange where 'social
companies' are listed," Yunus continues. "If you want to help poor
women in Latin America, you can invest in a Bolivian internet company that
sells clothing made by local women. If you have more affinity with new technology,
you can invest in a Vietnamese company that brings computers with speech technology
to villages. Universities should set up business schools for young social
entrepreneurs who don't learn how to make as much money as possible but the
best way to realize a social goal. And there should be a Wall Street Journal
that reports on this new group of companies. A whole new counterbalance should
be created that will greatly enrich society."

For more information: Muhammad Yunus: Banker to the Poor: Micro-Lending and
the Battle Against World Poverty (PublicAffairs, ISBN 1891620118), www.grameen-info.org.